If your city just banned or capped Airbnbs, buying a short-term rental in an unincorporated area outside the city limits is a legitimate response — but only if the property sits close to a specific, repeating demand driver. Harold Collins, a Birmingham-area agent and investor, built 18 furnished rentals on that exact thesis after the metropolitan cities around him started restricting short-term rentals.
The properties he bought looked wrong to local investors. They were in Shannon and McCalla, areas people described as country. What they were close to was the Hoover Met, home of the SEC baseball tournament and a constant flow of travel teams. That proximity, not the zip code’s reputation, drove the bookings.
This guide covers how to pick a demand anchor before you pick a location, why Collins is converting his portfolio from nightly to furnished mid-term, the land thesis behind buying larger tracts in a growth corridor, and why he is deliberately cutting from 18 doors back to roughly 12.
Key takeaways
- Unincorporated does not mean unregulated — county rules, HOAs and state law still apply, so verify with the county before you underwrite a nightly rate.
- An unincorporated address only works if there is a nameable, recurring demand anchor nearby. Collins anchored on the Hoover Met and its year-round travel-team traffic.
- Furnished mid-term rentals face far less competition than the saturated Airbnb market, carry fewer turns, and let you inspect the property more often.
- Mid-term tenant sources worth building for: relocations learning an area, insurance displacement from fire, water or lightning, and in-town work travel.
- When trimming a portfolio, sell the partnered deals first — the operator doing the grunt work never recoups sweat equity in a 50/50 split.
From the Real Estate Pros Show
This article draws on an interview with Harold Collins of Collins Group (eXp Realty) on the Real Estate Pros Show, hosted by Issa Hanna.
Why Municipal STR Bans Push Investors Past the City Line
The metropolitan cities around Birmingham began banning short-term rentals for the usual reason: parties, noise, and neighbors who complained loud enough to get an ordinance passed. Collins did not fight the ordinance or relocate to a different state. He asked a narrower question — what is the closest unincorporated property I can buy to the demand driver I already know exists?
That question is portable. Denver’s restrictions put a large portion of that market into a scramble. Any city with a residents-first political coalition can do the same thing on a council vote, and most give existing operators very little runway.
The structural advantage of an unincorporated parcel is that there is no municipal body positioned to ban you. You are outside the city limits, so the city council that regulated your competitor has no jurisdiction over your address.
That is not the same as being unregulated. A short-term rental ban in unincorporated areas is less likely, not impossible. Counties write their own rules, and many have adopted or are considering permitting regimes, occupancy caps, and lodging tax collection. State law, septic capacity, road access requirements, and deed restrictions all still apply. Before you close, confirm with the county planning and zoning office in writing what is currently permitted and whether anything is on the docket.
Underwrite the deal so it survives a rule change. If the property only pencils at a nightly rate and would be underwater as a furnished monthly or an unfurnished long-term rental, you have not removed regulatory risk — you have just moved it somewhere with fewer people watching.
Pick the Demand Anchor Before You Pick the Zip Code
Collins’s first purchase was not chosen for the neighborhood. It was chosen for its distance from the Hoover Met. Hoover, Alabama is a sports town with a lot of fields, the SEC baseball tournament is played at the Met, and travel teams cycle through constantly. Michael Jordan played there on the Barons during his baseball years, which tells you how long that venue has been drawing people in.
The local reaction was skepticism. When Collins told people in the business he ran Airbnbs in Shannon and McCalla, the response was some version of who goes there? The areas read as country. That skepticism was the edge — nobody else had thought to run short-term rentals there, so there was no competition for the overflow the anchor produced.
The test before you buy in an unincorporated pocket is whether you can name the reason people need a bed within a short drive. Vague answers do not count.
- Recurring events with a fixed venue — tournaments, fairgrounds, race tracks, convention space
- Institutional employers — hospitals, plants, universities, military installations
- Construction and industrial buildout — new facilities pulling in crews for months at a time
- Natural draws — lakes, rivers, trailheads, hunting land
If the only thing you can say is “it’s near the city,” you are buying commodity supply in a place with no walk-up traffic. The anchor is what replaces the visibility you gave up when you left the city limits.
Something that’s difficult to recreate tends to have a lot higher value. So when you have something that not a lot are available, you can charge a premium.
— Harold Collins, Collins Group / youmaylikeithere.com
The Mid-Term Pivot: Fewer Turns, Better Numbers
Collins started in short-term and is now moving the portfolio toward furnished mid-term. His reasoning is straightforward: it is easier to manage and the numbers work better. He describes falling into it through trial and error rather than planning it from the start.
The competitive argument matters more than the operational one. Everybody knows the Airbnb game. Far fewer operators run furnished mid-term, which means you are pricing into thin supply rather than against fifty comparable listings. Collins frames it as a general principle: something that’s difficult to recreate tends to have a lot higher value. When there aren’t many available, you can charge a premium.
Four tenant types fill these units:
- Relocations — people who have moved to the area and want to learn the neighborhoods before committing to a purchase
- Insurance displacement — households out of their home after fire, water damage or a lightning strike, with a carrier paying the bill
- Work travel — professionals in town on assignment
- Traveling medical staff — a standing source of 13-week stays near any hospital
Flexibility on timeline is what lets you charge above a standard unfurnished lease. A displaced family does not know whether they need four months or seven, and they will pay for a landlord who can accommodate either.
There is a control benefit too. Furnished rentals put you inside the property far more often than an annual lease does, so you catch maintenance problems while they are still cheap. You also get the tenant profile you want — people living and working there, not people renting a party house for a weekend.
Buying the Dirt, Not Just the Nightly Rate
The unincorporated play compounds because of what you get with the house. Collins bought properties with more land, in an area with less competition, and that land is the part of the thesis with the longest runway.
His holdings sit in the corridor between Birmingham and Tuscaloosa. A new hospital has come in and there is significant industrial growth in the corridor. That development does two things at once: it generates mid-term demand from construction crews, medical staff and relocating workers, and it converts what used to be country into something with a different highest-and-best use.
Some of his properties front higher-traffic roads and have potential to go commercial later. That optionality does not show up in a nightly rate spreadsheet, but it is a real part of the return. As Collins puts it, God isn’t making any more dirt — so having a lot of it, especially where traffic counts are climbing, is a position worth holding.
The other half of his portfolio runs on the opposite logic. In Bluff Park, the older Birmingham community where he lives, he owns six houses inside about a block and a half. These are acre to acre-and-a-half lots in a historic district where families do not leave and buyers are tearing down or adding on. He holds those for equity growth and easy rentability, not for a development thesis.
Two positions, two different jobs. The corridor land is a bet on what the area becomes. The in-town cluster is a bet on a neighborhood that is already proven and getting scarcer.
Scaling Up to 18 — Then Deliberately Back to 12
Collins went from one property to five to nine to 18 in four or five years, because each one worked. He is now targeting roughly 10 to 12, and the reasoning is worth copying.
With 18 homes, something is always broken. That is not a management failure — it is arithmetic. Every house has a maintenance event eventually, and 18 of them means the events never stop arriving. The time cost of that is real for an operator who also runs an active sales business and coaches his kids’ teams.
The second reason is capital allocation. Rather than spreading money across 18 average properties, he wants to put funds into making the keepers meaningfully nicer so they cash flow harder. Better product, better rate, fewer vacancy gaps. It’s the difference between operating a portfolio and just keeping it rented.
The selection criterion is the sharpest part. The properties going first are the ones with 50/50 partners. Collins raised money from clients who asked to come in on deals, and those partnerships have been fine — no issues, everyone on the same page. But he is the one managing them, doing the grunt work, doing whatever it takes to make them perform, and in a split deal the operator never recoups that sweat equity. Owning the property outright is the only structure where the work you put in comes back to you.
He is also not in a hurry. Rates are where they are and it is more of a buyer’s market, so he is willing to wait. The properties pay for themselves. There is no reason to fire-sell when you are not distressed.
Furnishing and Operations Without Blowing the Budget
Collins furnished his properties largely from estate sales, and the reason is quality rather than price. Older furniture that is still in good condition tends to be better built than new pieces that look good under fresh paint. Dressers and bed frames in particular hold up for years where flat-pack furniture is done in a season or two of tenant use.
The secondary benefit is that the units don’t look like every other listing. A house furnished entirely from one big-box catalog photographs like every other house furnished from that catalog.
What he buys new is the consumables — sheets, towels, cookware. Those get used up, stained and replaced regardless of quality, so there is no argument for sourcing them secondhand.
One operational note that sounds small and isn’t: after enough nights of hooking up a trailer in the evening and unhooking it in the morning to haul furniture, he bought a 1995 Ford F-150. A cheap truck that stays loaded removes a daily friction point during the furnishing phase, which is exactly the kind of drag that slows down a rollout.
On the management side, the portfolio runs on a property manager plus family. His wife handles communication for the rental properties and writes all the leases, while also serving as closing coordinator for the sales business. That structure works at this scale — and part of the reason for trimming to 12 is that 18 properties is more than the current setup should carry.
Frequently asked questions
Does buying in an unincorporated area really exempt a short-term rental from regulation?
No. It removes the city council from the equation, which is meaningful because municipal ordinances are where most short-term rental bans originate. But counties write their own zoning, permitting and lodging-tax rules, and state law, septic requirements, road access standards and recorded deed restrictions all still apply.
Verify current county rules in writing before you close, and ask whether any short-term rental ordinance is being considered. Then underwrite the deal so it still works as a furnished mid-term or a standard long-term rental if the nightly option goes away.
How do you know an unincorporated location will get bookings at all?
You need a nameable, recurring reason people need a bed near that address. Collins bought near the Hoover Met, which hosts the SEC baseball tournament and draws travel teams year-round in a town full of fields. Local investors thought the areas were too rural to work, and the anchor proved them wrong.
If you cannot name the venue, employer, hospital or facility generating the demand, you do not have a thesis. Proximity to a city alone does not produce bookings when nobody is driving past your listing.
What kinds of tenants fill a furnished mid-term rental?
Collins names three main sources: people who have relocated and want to learn an area before buying, households displaced by an insurance claim from fire, water or lightning, and professionals in town for work. Traveling medical staff on multi-week contracts are a fourth reliable source near any hospital.
What these tenants have in common is that they need a furnished place for longer than a vacation and shorter than a year, and they are usually spending someone else’s money or a relocation budget. That combination supports a premium over an unfurnished lease.
Why sell the properties you own with partners instead of the ones you own outright?
Because in a 50/50 deal the operator does the work and splits the return. Collins manages his properties, does the grunt work, and does whatever it takes to make them perform — but on a partnered property he only recovers half the value that effort creates.
On a property he owns outright, all of that sweat equity comes back to him. When he decided to trim from 18 doors to roughly 12, the partnered deals were the logical ones to exit, with all partners in agreement.
Is it worth buying larger lots for a rental even if you don’t need the land now?
In a growth corridor, yes. Collins’s properties sit between Birmingham and Tuscaloosa, where a new hospital and industrial development are reshaping what used to be rural land. Larger tracts, especially with frontage on higher-traffic roads, carry the option to convert to commercial use later.
That optionality is not captured in a rental yield calculation, which is precisely why it is often mispriced. The rental income carries the holding cost while the corridor develops around you.
The bottom line
Before you shop for a property outside the city limits, identify the demand anchor and call the county — in that order. A parcel with a recurring reason for people to need a bed nearby and a written answer on what the county permits is a defensible position; one without either is just a house in a place with no foot traffic.
